Title: Open Season for gas pipeline investment in the EU cross-border: Insights from the Spain-France case
Abstract: The EU is currently undertaking key regulatory reforms to accomplish the Internal Gas Market. The European objective is to complete the EU gas market integration. A crucial element of such reforms is creating an appropriate environment based on two focuses: modernize and expand the European energy infrastructure. Precisely, special attention is paid to link national networks by creating cross-border infrastructure in order to achieve the EU energy policy objectives: competitiveness, sustainability and security of supply. However, there are some difficulties that must be overcome. Between them, the lack incentives to invest in cross-border infrastructure due to the uncertainties in the future energy outlook and the financial risks attached to them. With the aim of encouraging different participants to invest in gas infrastructure, the EC and some Gas Regulatory Authorities have formulated a number of infrastructure development plans. Nevertheless, there is a need for designing new incentives and mechanisms to obtain the required level of investment. Then, Open Season is viewed as a key decision making Investment mechanism based on market preferences where the capacity is allocated ex-ante. The question that rises up is if it is reliable to trust on the market for the decision-making process. The analysis of the Open Season is based on a case study in this thesis. It is the case of the Open Season between Spain and France, where a lot of participants take place on it (TSOs and regulatory authorities from both countries, third parties interested, etc.). It is a representative case since the gas consumption in Spain and France is the 17% of the EU. Spain is connected with Algeria and France with numerous European countries. However, there is a light link between them despite potential advantages that a stronger interconnection may offer: access of inner EU countries to LNG capacity and Supply diversification. The main recognized problem is that the pricing system is different in each country. The postage stamp is established in Spain while France is based on an entry-exit system. Then, is the open season a reliable mechanism for investment under the EU framework? The analysis will conclude arguing that the Open Season may be an efficient investment mechanism in a more homogenous European market. However, the differences between the national markets do not give enough room for Open Season under the current European framework. A higher level of centralization for investment decisions is needed (i.e. European central planning on investment).
Publication Year: 2012
Publication Date: 2012-01-01
Language: en
Type: article
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